The Gateway to Algorithmic and Automated Trading

The digital currency (r)evolution

Published in Automated Trader Magazine Issue 35 Winter 2015

If bitcoin is the BitTorrent of cryptocurrencies, what's going to be the Spotify?

It was clear that bitcoin was going to become a very big deal when a unit of the digital currency hit parity with an ounce of gold in USD. A little over one year later, ATMs, derivatives and exchanges are springing up and everybody seems to be paying attention.

So why did news outlet Quartz call it "the worst investment" of the year? Partly to be provocative, but also because the price collapsed by more than half - from some $770 in Jan 2014 to just under $320 at the end of the year using CoinDesk's BPI (Bitcoin Price Index). At its peak, bitcoin was trading at $1,138 in November 2013 on the Mt. Gox exchange.

There might be shenanigans behind these swings. Specialist media said two computer algorithms - Willy and Markus - were artificially inflating the price of bitcoin at the venue.

That would be the same Mt. Gox exchange that collapsed amid claims that hundreds of thousands of bitcoins were lost to hackers. Early this year, European exchange Bitstamp was hacked resulting in the theft of
$5 million (19,000 units).

And don't forget about bitcoin being the choice currency to buy drugs. US authorities seized some 50,000 bitcoins (approx. $20 million at the time) from the online black market Silk Road, ultimately auctioning them...

The remainder of this article is only available to Paid Subscribers

Click here to purchase a subscription to Automated Trader

  • Copyright © Automated Trader Ltd 2017 - Strategies | Compliance | Technology

click here to return to the top of the page